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Saturday, April 15, 2017

Austerity Continues

Jobs don’t come from the great benevolence of bosses nor are profits conjured out of thin air by the genius of capitalists. Employers generate profits by paying employees much less than the value of what they produce. Increased exploitation through work speed-ups, increased workloads and benefits reductions mean that capitalists are taking a bigger share of the value of what you produce.

The real meaning of “freedom” that capitalists so love to extol. “Freedom” for industrialists and financiers is freedom to rule over, control and exploit others; “justice” is the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Working people are “free” to compete in a race to the bottom set up by capitalists.

The average U.S. household earns about $18,000 less than it would had wages kept pace with productivity gains, and the average Canadian household is short at least $10,000 per year because of pay lagging productivity gains. Workers across Europe, including in Britain, Germany and Spain, have also seen pay lag productivity.

The value of the minimum wage in the U.S. is about two-thirds of what it was when it reached its inflation-adjusted peak in 1968. The Canadian minimum wage is worth about a dollar less than its peak in 1976. Australia’s minimum wage is well below what it was worth in 1985.

A 2015 study by the researchers at the University of California Berkeley Center for Labor Research and Education found that public benefits given to people who have jobs but can’t live on their meager wages cost the public more than $150 billionannually in the United States — more than half of total public-assistance spending by federal and state governments. Wal-Mart alone costs taxpayers an estimated $6 billion per yearsubsidizing the retailer’s low pay and paltry benefits at the same time it pays out similar amounts in dividends, half of which go to the Walton family.

orthodox economists (or “neoclassical” or Chicago School)continue to tell us that the reason for ongoing economic stagnation is that wages and unemployment benefits are too high. Yes, that’s right. You haven’t suffered sufficiently enough. Just ignore the years of stagnant wages, the decades of wages trailing productivity ever further, housing costs rising far more sharply than inflation, and the increased use of debt just to stay afloat. The right-wing economists simply say to us if you would just work more for less, all will be well. The argue that In other words, U.S. firms have not been raising employee wages over recent few years because of what is called “sticky wage” - pay cuts that didn’t happen during the Great Recession so now employers are “prevented” from offering increases in wage or better benefits. The San Francisco Federal Reserve issued a report that blamed ongoing economic weakness on wages not falling enough. The paper claimed:

“One explanation for this pattern is the hesitancy of employers to reduce wages and the reluctance of workers to accept wage cuts, even during recessions, a behaviour known as downward nominal wage rigidity.”

The Nobel Prize for economics (it isn’t actually a Nobel Prize but the “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”), is widely considered one and it’s the highest honour an economist can receive. It almost invariably goes to a conservative economist who upholds orthodox ideology. One recent recipient is Thomas Sargent who is known for writings in which he argues that unemployment benefits are too generous, and if such benefits were reduced, there would be “incentive” for people to go back to work. Social safety nets in general lead to unemployment, Dr. Sargent believes workers ought to be prepared for having low unemployment compensation in order to get the right incentives to search for jobs.Depending on what particular state, unemployment benefits amount to 30 to 50 percent of lost wages in the United States — hardly enough to live comfortably on, and it’s cut off after 26 weeks. British benefits are capped at £73.10, and it can be less if you have savings you have yet to tap. Nobody is living large on that amount except for4 the employing class since reduced wages provide a boost to profits. However, Falling wages were a reality during the Great Depression, but that didn’t help matters. By 1933 in the United States, manufacturing wages fell 34 percent and unemployment rose to about 25 percent. The Canadian economy contracted by more than 40 percent and unemployment reached 30 percent in 1933. Collapses in wages did not bring better times.